The Polish Ministry of Finance has published – for consultation – a draft act on the top-up taxation of international and domestic groups, implementing into the Polish legal system the requirements of Council Directive (EU) 2022/2523 of 15 December 2022 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union (the Directive). The act will enter into force on January 1 2025, although an opportunity to elect (irrevocably) to apply the provisions of the act from January 1 2024 (and therefore retroactively) is provided for.
Key GloBE principles applicable in Poland
Polish entities may become liable to the following top-up taxes:
A global top-up tax that will apply primarily to ultimate parent entities of international groups located in Poland;
A domestic top-up tax, which is intended to be the Polish qualified domestic minimum top-up tax (QDMTT); and
A tax on undertaxed profits.
These taxes implement the three key principles of the GloBE rules (the income inclusion rule, the QDMTT, and the undertaxed profits rule) into the Polish legal system, with the reservation that despite the expiry of the deadline for the implementation of the Directive's provisions set for January 1 2024, the relevant Polish provisions will not enter into force until January 1 2025 (the aforesaid election might, however, be made).
The impact of GloBE on Poland as a country to invest in
The introduction of global tax requirements may result in the Polish tax incentive system no longer being attractive to constituent entities of international and domestic capital groups whose consolidated revenues exceed €750 million in at least two of the four years preceding the given fiscal year. For this reason, it is anticipated by business that, simultaneously with GloBE, Poland will issue provisions – amendments to income tax acts – that will allow at least R&D relief (often used by innovative enterprises) to be treated as a qualified refundable tax credit.
The approach to Polish tax incentives remains a key challenge for the Polish legislator, which is aiming to ensure that the introduction of the GloBE requirements does not result in a decline in Poland's competitiveness as a location for new investments. From the point of view of constituent entities that reside in Poland, it is crucial, above all, to understand on which principles they will have to calculate the top-up tax. The temporary country-by-country reporting safe harbour (CBCR SH) may provide some support in this regard.
The CBCR SH and Polish covered taxes
The application of the CBCR SH in Poland will also be required to meet at least one of three tests:
A de minimis test;
An excess profit not greater than zero test; or
A simplified effective tax rate (ETR) test.
The Polish draft act also allows for the application of the CBCR SH for financial years 2024–26, with the reservation that in the case of Polish constituent entities, the possibility to apply the provisions from 2024 will depend on the voluntary choice of such a course of action. Significantly, if any of the tests is not met, it will be necessary to calculate the top-up tax on the basis of the complete data (after adjusting it accordingly in the course of applying a number of corrections prescribed by law).
The calculation of a simplified ETR (or a complete ETR where it is not possible to apply the CBCR SH) will require, among others, the determination of which taxes should be considered as covered taxes under the GloBE implementing act. This will include corporate income tax and withholding tax. Significantly, in Poland, covered taxes are most unlikely to be, inter alia, turnover taxes (VAT and excise duty), stamp duty, or a specific tax imposed in Poland only on certain financial institutions (including banks).
While the identification of taxes considered as covered (qualified) for the purposes of ETR calculation will most likely be facilitated by the Polish legislator through the addition of an open catalogue of them, major difficulties and interpretation doubts will certainly be raised with respect to the calculation of qualified net income, which, in turn, will require a number of corrections to the accounting result.
Opinions (interpretative and protective) on top-up taxation
All doubts related to the application of the GloBE regulations may be resolved by obtaining an official standpoint of the tax authority presented in an opinion on the matter in the scope of top-up taxation (a so-called interpretative opinion) or a protective opinion in the scope of top-up taxation.
In order to obtain such opinion, the payment of the relevant fees will be required, up to PLN 65,000. In the authors’ opinion, such a high price for obtaining an authority's decision may prove to be an insurmountable barrier for many enterprises, which will decide to apply for any of the aforesaid opinions only in the most difficult situations.
However, the possibility of obtaining an opinion (including a protective opinion) in respect of GloBE, as referred to above, will not resolve many of the problems arising from the high complexity of the regulations. Given this, taxpayers under the GloBE regulations are already seeking the support of tax advisory companies or accounting firms to verify the extent of their obligations, including reporting obligations such as the filing of a GloBE Information Return or GloBE tax returns.
Summary
It should be emphasised that Poland will soon join the group of countries that have effectively implemented the GloBE regulations. This circumstance will involve a number of new obligations (including calculation and reporting obligations) to be met by Polish entities that are part of large international and domestic groups.
